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Tesla Wants Indian Government To Sharply Reduce Import Taxes On EVs

Tesla Wants Indian Government To Sharply Reduce Import Taxes On EVs
Tesla wrote off a letter to Indian minister requesting a big reduction in import duties on electric vehicles into the country, claimed reports citing sources with knowledge of the matter, which was followed by a tweet from Tesla’s Chief Executive Elon Musk stating that the company was likely to set up a factory in India if it first finds success with selling its vehicles in the country by importing them.
However, sources said Prime Minister Narendra Modi's administration is likely to resist the United States based electric car maker's pitch to lower duties as the Indian government has pushed for high import taxes for many industries in its efforts to encourage domestic manufacturing.
"We want to do so, but import duties are the highest in the world by far of any large country," Musk said in reply to a tweet about launching the company's cars in India.
"But we are hopeful that there will be at least a temporary tariff relief for electric vehicles," Musk added.
In the past, there has been lobbying to reduce import taxes by other luxury automakers in India hat typically such requests have been denied because of resistance to such requests from domestic car makers.
Reports claimed that in its letters to ministries and the country's leading think-tank Niti Aayog, Tesla argued that it would be enough for the company to cut down federal taxes on imports of fully assembled electric cars to 40 per cent. Tesla has set a target to start selling its vehicles in India this year.
Currently, the federal tax rate for imported vehicles is at 60 per cent for cars priced below $40,000 and 100 per cent for cars priced more than $40,000.
"The argument is that at 40% import duty, electric cars can become more affordable but the threshold is still high enough to compel companies to manufacture locally if demand picks up," claimed reports quoting a source.
Only one model of Tesla - the Model 3 Standard Range Plus, is priced lower than $40,000, according to data from Tesla's US website.
No comments from the Niti Aayog or the concerned ministers were available in the report. Reports said that Tesla had written letters to the transport and heavy industries ministries of India.
The market for electric vehicles in general and electric cars in particular in India is still in a very infant stage as the cost of vehicles is beyond the means of the average consumer which is compounded with the issue of very little charging infrastructure in the country.
More than 2.4 million cars were sold in India last year of which only 5,000 were electric and most were priced lower than $28,000.
The EQC luxury EV from Daimler's Mercedes Benz became commercially available in India last year at a price of $136,000 while three electric SUVs were launched in India this week that have a starting price of $133,000.

Christopher J. Mitchell

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